Mooradian Corporation's free cash flow during the just-ended year (t = 0)was $150 million,and its FCF is expected to grow at a constant rate of 5.0% in the future.If the weighted average cost of capital is 12.5%,what is the firm's total corporate value,in millions?

Question

Quizplus · Accepted Answer

To calculate the total corporate value of Mooradian Corporation, we can use the formula:

FCF / (WACC - g)

where FCF is the free cash flow for the previous year (t = 0), WACC is the weighted average cost of capital, and g is the expected growth rate of FCF.

Plugging in the given values, we get:

$150 million / (0.125 - 0.05) = $2,100 million

Therefore, the total corporate value of Mooradian Corporation is $2,100 million, which is option C.

Mooradian Corporation's Free Cash Flow During the Just-Ended Year (T